In conversation with Maya Zehavi, VP Product, QED-it

September 12, 2017 – Eighth episode of the short interview series with the influencers FinTechStage is bringing to BAI Beacon 2017 as part of our renewed strategic alliance.

This time around we are in conversation with Maya Zehavi, Vice President Product at QED-it. QED-it helps the blockchain industry go beyond experimentation and reach its full potential.

How can blockchain and cryptocurrencies be leveraged effectively and what are the true opportunities that exist around them?

Blockchain as a tech has come to encompass a vast range of implementations of distributed data systems and tokenized business models. Some are innovative, building upon Satoshi’s original blockchain, for enterprise applications, identity solutions, provenance, clearing & settlements to name a few. Others leverage blockchain buzzwords to recycle tech that’s been around the block for a while. When observing this tech in the more abstract it’s clear that blockchain’s real innovation is a trust in an immutable distributed database in a manner that can render trust in third parties unnecessary, thus leading to disintermediation of entire market structures. How and by who this tech is used is where the crypto-world where public blockchains (where ICOs reside) fork from the enterprise uses & opportunities.

Enterprise – blockchain or distributed ledgers can lead to a more streamlined value chain where the need to to rely on third party intermediaries for reconciling data, privacy, risk assessments, valuations might be altered dramatically.

Financial Markets – Both enterprise blockchains and public crypto currencies have the potential to rethink modern financial architecture. Blockchain have the potential of being a new backbone for financial markets, but also a re-think. The combo of having businesses conduct business processes (asset-based-financing, procurement, supply chains, etc’) can lead to new financial instruments funding actual business, and not awaiting quarterly reports to price assets be it equity or debt. In so far of existing markets, entire bloated intermediaries might be rendered redundant (custodian banks or clearing houses). All this is still in the air, and dependant not only on the tech maturing enough to be a scalable alternative, but also on market forces not becoming barriers.

Regulatory – I am a firm believer that regulators can leverage blockchain tech to remotely set the rules of the game, and harness the blockchain to monitor all parties play by these rules. One of my favorite use cases is one in which regulators can create Zero-Knowledge proofs for compliance. Have these proofs run on the entities under their jurisdiction, while entities publish their compliance via the blockchain. KYC/AML or real-time taxations are just a few examples.

Governments – Governments can harness this innovation for government offerings in seek of efficiency, controlled transparency, identity services, and real time auditing.

In your opinion, are there on the market real competitors that can challenge the primacy of blockchain?

In some rare coincidence blockchain tech came along at a crucial point post-financial crisis, where institutional trust is at a low point, regulatory compliance demands are being pulled back, while tech giants are stretching their arms into other industries. If you were to think of blockchain as the medium to communicate business processes externally while aligning with the financial needs, it’s easy to see these tech plays as the competition. There is no need for a blockchain if the entire value chain from procurement, working capital, sales, shipment, and customer support is consolidated on Amazon. As big tech makes use of the google-bytes they’ve accumulated on users, companies, customer behavior, location, etc the need for information to leave the walled garden is minimized.

Do you think cryptocurrencies will ever replace fiat currencies?

One needs clarity as to what exactly cryptocurrencies are in order to assess them as a feasible alternative to fiat:

Publicblockchaincyrpto–currencies that anyone can mine, purchase (Bitcoin, Ethereum, Litecoin) and that are truly decentralized in the sense that the amount of currency is pre-determined. I believe the only scenario where these currencies as they exist today might replace fiat is in the extreme scenario of a failed state. The urgent need for a set of individuals who can’t rely on their local institutions or infrastructure for stability might result in a flee to the crypto as a temporary measure. The caveat in this case, is that this will also depend on more innovation (lightning & segwit style) to ensure these blockchains are cheap payment channel alternatives, and price stability if they are to serve as a reliable store of value.

Tokenizedassets – One can easily see a reality where tokens on blockchains serve as a means for clearing trades, be it a blockchain representation of financial assets, loans, titles of ownerships, or a token for an entire value chain of a company on a blockchain. I find it more probable we’ll see a food-coin to settle any exchange of goods in the food industry than a local neighborhood coin. This stems from the recognition that blockchain might be cutting edge cryptography but no one ever claimed blockchain is effective or scalable.

Fiat-on-Crypto– This scenario is one I find to be the most fascinating and feasible. In lure of central banks looking to eliminate cash and implement negative interest rates, Ken Rogoff and other leading economists are looking into blockchain tech. More than one several central bank has been pursuing leveraging blockchains for real-time-gross-settlements, while Estonia has only recently announced a planned ICO. In my opinion, for a central bank to adopt blockchain as an infrastructure for issuance of fiat & settlement a deeper macro-economic understanding of the tech is needed. How can blockchain protocols be leveraged by central banks to implement macroeconomic policies?

Control money supply? Interest rates? Airdrops? Should these protocols be tailored to dynamically be modified according to policy (validation rules, issuance, etc.) Would they have to first prove themselves quantum resistant?

What is your view towards the hype of ICO’s?

ICO are currently the wild-wild-west of cryptic scams. There’s a case to be made that ICOs are a way to get crucial funding for crucial infrastructure, or to crowdfund moonshot projects outside of the regulatory purview. However, the sheer amount of money invested in 2017, and the return on ICOs has been a VIP invite for scammers, hackers, and some other sketchy characters. And this is before the dumb money has arrived. The lax regulatory response, consisting of bark alone while awaiting the bite, has only added more air into the bubble. That’s not to say they aren’t innovative as an investment vehicle replacing venture capital, or diminish the possibility that real blockchain adoption might end up coming from the public crypto assets. I do have serious issues with non realistic valuations, fantasy projects, white-papers that read as buzzword shakes, terms of ICOs where founders have a built-in payout, non-disclosure of institutional soft-commits or their dumps, and the hybrid security-to-be a token of a non existent project. That’s without pointing out the back rooms of how these ICOs actually happen, and are managed by serial ICOers.

The ICO as an industry is akin to a toddler. People figured out there’s fast money to be made, but have yet to ensure the institutions & models needed to create the right kind of levers that can protect investors’ interest.

BIO:

Maya is the VP Product of QED-it, a blockchain privacy start-up that just recently left stealth. She’s been in the blockchain space for the past 3 years. Most recently she headed Business Development for Coin Sciences. Maya has experience in banking IT, private equity & supply chain.